Question

Which of the following was a major economic problem that India faced in 1991?

• A. High unemployment rate
• B. High illiteracy rate
• C. Foreign currency crisis
• D. Low life expectancy rates

Answer 1

The correct option is C Foreign currency crisis

Due to a series of economic policy failures and a rise in international oil prices, India did not have sufficient foreign reserves to pay for the imports of essential commodities. In 1991, India's foreign currency reserve was adequate to pay for imports for only two weeks. All these events resulted in a foreign currency crisis. To overcome this crisis, the government adopted liberalisation, privatisation, and globalisation policies.